While Hewlett-Packard says it "continues to evaluate" the sale of underperforming businesses, the company's cash flow problem will make the shedding of assets unavoidable. So what's likely to head to the auction block? Everything from notebooks and desktop PCs to Itanium servers and tape drives that have been draining assets could be on the market.

A Breakup Alternative

For Chief Executive Meg Whitman, selling off pieces of the crippled tech giant would be a much better alternative to breaking up the company. Whitman has opposed the latter option, starting with her decision in 2011 to nix a proposal by her predecessor, Leo Apotheker, to spin off the company's personal computer unit.

Since then, Whitman has ignored Wall Street analysts who say shareholders would be better off if the company spun off the division that sells PCs and printers from the one that sells software, hardware and services to companies.

As a less dramatic alternative, getting rid of businesses draining the company's limited resources, would help HP make better use of limited cash. In fiscal 2012, HP's free cash flow dropped to $6.9 billion from $8.1 billion the previous fiscal year, according to The Wall Street Journal. That's a trend that could spell trouble if not stopped. Without cash, a company will find it difficult to develop new products, make acquisitions, pay dividends and reduce debt.

Getting rid of underperforming businesses is one way to improve cash flow and avoid splitting the company. "Everybody zeroes in on printers and PCs as the things they should potentially sell, and quite frankly, there's not really a logical buyer for either of those businesses," Crawford Del Prete, analyst for International Data Corp., said. "And, those businesses generate a significant amount of cash, which Hewlett-Packard needs right now."

HP-UX And More Must Go

A more logical sale would be the Itanium server business. HP has spent a lot of money trying to drive sales of its HP-UX Unix server that runs on that chip architecture, while the business continues to shrink. In 2010, Microsoft said it would drop support for Itanium and Oracle said a year later it wants to do the same.

Another candidate for jettisoning is HP's low-end IT outsourcing business, which was included in the 2008 acquisition of Electronic Data Systems. Earnings from the services business has been falling, and last August, HP said it would write off $8 billion in goodwill from the EDS purchase.

Last year, General Motors, a major HP customer, said it would move away from outsourcing IT and take some work in-house. The announcement made industry observers wonder whether HP can handle those large-scale deals, Del Prete said.

Within HP's Personal Systems Group that makes PCs, workstations, tablets and printers, the company could sell the low-performing notebook and desktop PC businesses, which have been trumped in the market by tablets.

The low-end printer business that primarily serves consumers and small businesses could also be sold. However, printers are still used in emerging markets, so HP would be just as likely to hold off to see how profitable those markets become. "HP has a plan to drive those businesses, so I'd be surprised to see them get out," Del Prete said.

Finally, tape drives used for long-term data storage is a candidate within the company's enterprise servers, storage and networking division. Such a low-margin business would be best left to IBM and others with larger stakes in the market.

HP likely has other losers within its product lines that it would be better off without. Whitman should act quickly to get rid of the chaff and focus resources only on the profit generators.

Hewlett-Packard has made if official. The Justice Department is indeed investigating HP's allegations that Autonomy execs tricked the troubled technology giant into paying way too much for the British software maker. In disclosing the probe in its annual regulatory filing with the Securities and Exchange Commission, HP has started the next chapter in its ongoing feud with Autonomy founder Mike Lynch - who denies duping HP.

Probe Expected

The probe was expected, given that HP announced last month it had proof that it had been conned in last year's $10.3 billion acquisition-turned-fiasco. At the time, HP said it had turned over the evidence to the Justice Department, the SEC and the U.K. Serious Fraud Office. "On November 21, 2012, representatives of the U.S. Department of Justice advised HP that they had opened an investigation relating to Autonomy," the company reported to the SEC Thursday.

HP claims Autonomy executives inflated the company's value by reporting some revenue prematurely or improperly. The alleged bogus reporting accounts for almost 60% of the $8.8 billion write down HP booked last month on the Autonomy deal.

Ex-Autonomy Chief Executive Lynch responded to the investigation Friday by continuing to deny any wrongdoing. On a website Lynch set up to counter HP's allegations, he reiterated his complaint that HP has yet to release any details of the alleged scam. "Simply put, these allegations are false, and in the absence of further detail we cannot understand what HP believes to be the basis for them," Lynch wrote.

Details Still Hidden

HP is still keeping the details of the allegations confidential among itself, prosecutors and regulators. Thursday's filing did not provide any new details. Nevertheless, Lynch is ready to tell his side of the story. "We will co-operate with any investigation and look forward to the opportunity to explain our position," he wrote.

Throughout the claims and counterclaims, HP stock continues to get hammered. From the beginning of 2012 to Thursday, the price has fallen 45%.

Officially, the Federal Bureau of Investigation won't discuss whether or not it is involved in the case. However, an unidentified source told Bloomberg that the agency is assisting the SEC in its investigation.

While Autonomy execs are under the investigatory microscope, shareholders are blaming HP for the deal that ended up wasting billions of dollars. In the SEC filing, HP lists 10 lawsuits, including four class-action suits.

Apotheker Still Blamed

HP CEO Leo Apotheker, who was fired in September 2011, led the Autonomy deal as part of a plan to get HP deeper into the high-margin enterprise software business, while reducing its dependence on selling low-margin PCs. Autonomy software searches, organizes and manages data within large companies.

Apotheker sealed the end of his short career with HP when he announced he was considering the sale of its PC business. Because he had no buyer, Apotheker's disclosure sent Wall Street analysts into a tizzy. To them, Apotheker appeared to lack a clear vision or roadmap for saving HP from its years of bad deals, management turmoil and strategic blunders.

Current HP CEO Meg Whitman was on the company's board when it signed off on the Autonomy deal. Nevertheless, she has distanced herself and other board members from the debacle by laying the blame on Apotheker and then mergers and acquisitions head Shane Robinson, who also left the company in 2011.

History aside, now that federal prosecutors are officially involved, the repetitive claims and counterclaims being tossed back and forth between HP and Lynch won't matter much. The companies, their customers and shareholders now have to hope for clarity in the courts, especially if charges are filed.